Employers with wage bills of more than £3m per year will be liable for the 0.5% charge. For the purposes of the levy, an ‘employer’ is someone who is a secondary contributor, with liability to pay Class 1 secondary National Insurance contributions (NICs) for their employees.

The levy will not be charged on other payments such as benefits-in-kind, which are subject to Class 1A NICs.

Employers will have a levy allowance of £15,000 per year to offset against the levy you must pay. This means you will only pay the levy if your pay bill exceeds £3 million in a given year.

It was also confirmed in the guidance that the levy will be paid to HMRC through the PAYE system.

The government expects to raise £2.7bn through the levy in 2017-18, rising to £3bn by 2020-21.

Under the plans for the levy, the government has proposed that employers that are too small to pay the levy, around 98% of employers in England, will have 90% of the costs of training paid for by the government, reassuring millions of small businesses. 

Extra support worth £2,000 per trainee will also be available for employers and training providers that take on 16- to 18-year-old apprentices or young care leavers. Employers with fewer than 50 employees will also have 100% of training costs paid for by government if they take on these apprentices.

Apprenticeships and skills minister Robert Halfon said: ‘The apprenticeship levy will help create millions of opportunities for individuals and employers. This will give our young people the chance they deserve in life and to build a highly skilled future workforce that the UK needs.’

The apprenticeship levy and how it will work can be found here.